What are Carbon Credits?
Carbon credits are emission reductions generated from certified climate action projects that reduce, remove or avoid greenhouse gas (GHS) emissions. It is reduction or removal of one tonne of CO2 equivalent (tCO2e).
Other benefits of climate action projects include:
- Empowering communities
- Protecting ecosystems
- Restoration of forests
- Reduction of reliance on fossil fuels
Types of Climate Action Projects
1. Avoid Emissions – Forestry & Conversation
Credits are created based on either the carbon captured by new trees or the carbon not released through protecting old trees.
2. Reduce Emissions – Energy
Replacing fossil fuel-derived energy with energy from renewable sources – solar, wind or hydro.
3. Capture & Destroy Emissions
Capture of high-potency greenhouse gas (GHG) like methane.
3. Community Projects
Community projects often help to introduce energy-efficient methods or technology to undeveloped communities around the world. Projects like this help to make entire regions more sustainable, provide empowerment and independence that can lift communities out of poverty.
Types of Carbon Credits
1. Certified Emission Reductions (CER)
Purchasable carbon credits (Kyoto Protocol compliant – which requires countries to reduce emissions). Countries or organizations can purchase CERs to reach agreed emission targets.
2. Voluntary Emission Reductions or Verified Emission Reductions (VER)
Purchasable carbon credits verified by independent third parties based on internationally recognized standards. Organizations not bound by the Kyoto Protocol may offset their emissions through VERs.
Commonly used international standards are:
Carbon credits are assigned and issued. Once an organization or an individual buys a carbon credit, the credit is transferred and permanently retired so it cannot be reused or resold.